How the Treasury Dept. Catches al-Qaeda Terrorists Post 9/11

The war on terror is not just being played out on the battlefields, or at the Defense or State Departments, or in the shadowy world of the FBI or the CIA.

Its also being fought by the bean counters and financial wizards at the Treasury Department, which has the only finance intelligence unit of its kind to track terrorist financing around the globe and starve terrorists of their funding. The push by Treasury has also helped lead to the discovery of al-Qaeda assets in the U.S. and Irans support of members al-Qaeda, the architect of the 9/11 attacks.

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Treasurys intelligence unit is the first office of its type in the world, and is a revolutionary development in the national security arena, says Daniel L. Glaser, Assistant Secretary of Treasury for terrorist financing.

So much so that the U.S. is within reach of achieving our core goal of defeating al Qaeda, the only international terrorist group to successfully conduct an attack on U.S. soil, as its financing is drying up, notably with the death of Osama bin Laden, Glaser says.

With pressure from U.S. law enforcement and Treasury, al Qaeda will come under increasing financial pressure," Glaser says, even though other pillars of financial and logistical support remain.

Because of its work, Treasury just recently uncovered Irans backing of al-Qaeda, says Glaser, who recently testified to Congress.

Among our most important acts against Iranian state sponsorship [of terrorism] occurred just two months ago when we, for the first time ever, exposed Irans secret agreement with al-Qaeda members, which allows al-Qaeda to funnel funds and operatives through Iranian territory, Glaser says. This revelation was made available as part of the designation of Yasin al-Suri, a key Iran-based al-Qaeda facilitator, and a number of his associates as financiers of the architects of 9/11.

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Glaser adds: Money trails dont lie, financial information is a uniquely reliable source of intelligence on terrorist networks as a whole, information now being uncovered by the Treasurys Office of Terrorism and Financial Intelligence.

Glaser also says that al-Qaeda has been starved of its traditional donor base in the Gulf, in particular Saudi Arabia and the United Arab Emirates.

The United States aggressive stance on terrorist money trails also helped put the pressure on Saudi Arabia to launch its own, new attack on terrorist money flows.

In May 2010, for the first time, the Council of Senior Ulema, Saudi Arabias highest religious authority, issued a fatwa against terrorist financing, which has the force of law in the country.

This move is emblematic of the Saudi political will to address terrorist financing concerns, says Glaser.

The 9/11 attacks pushed the U.S. national security agencies out of Cold War thinking into a new world of ideas that have broken barriers on tracking terrorists via top-secret money probes around the globe. Prior to 9/11, terrorist financing was not a priority on the national security agenda.

That led to a lax environment where charities like the Holy Land Foundation, a Hamas charity, raised more than $13 million in 2000 and operated openly in the U.S. with offices in Texas, Illinois, New Jersey and California, Treasury says.

After 9/11, U.S. intelligence authorities discovered that al Qaeda had received much of its funding from a web of charities, Islamic hawalas, (secret money pools), Internet operations, Islamic banks and rich donors in Saudi Arabia, Kuwait, Qatar and the United Arab Emirates. (al Qaeda's pre-9/11 budget was estimated at $30 million, according to the U.S. commission probing the attacks, but law enforcement believed that sum grew after the attacks.)

Within months of the 9/11 attacks, the Defense Dept., the FBI, the CIA, and Treasury, among others, launched unprecedented terrorism financing operations through joint terrorism task forces across the country. The G7, the G20, the International Monetary Fund, and the World Bank also stepped in to assist in tracking terrorist money trails. Today, overseas government officials are pushing for more effective civil, criminal, and administrative sanctions in place for hawalas that fail to disclose information, says Treasurys Glaser.

The crackdown has since resulted in a number of successful domestic terrorist financing cases, says Glaser, against organizations such as the Holy Land Foundation; Al-Barakaat, a Somalia-based hawala; Global Relief Foundation, an Islamic charity in Bridgeview, Ill., with links to al-Qaeda; and another front for al-Qaeda, Benevolence International, which is on the list of the 20 main financiers (the golden chain) of the 9/11 architects. Benevolence had offices in an estimated 18 countries, including the U.K. and the U.S.

By following the money, Treasury officials are helping to uncover secret terrorist cells, sending their donors running, choking off their funds for terrorist attacks.

The crackdown, though, has helped make terrorist funding far more decentralized, leaving terrorists to resort to petty crimes to fund their attacks.

For example, al-Qaeda in the Islamic Maghreb, the group's North African branch, raises funds via ransoms from kidnapping, among other crimes.

Palestines Hamas, which physically controls territory, can levy taxes on ports, businesses and local populations for revenue, U.S. officials note.

To help pay for the 2002 Bali bombings, Jemaah Islamiyah allegedly robbed jewelry stores (the Treasury has frozen the attackers U.S. accounts and will slap sanctions on any American who gives them funds).

Attacking financial flows that largely avoid the financial system, for example, kidnapping-for-ransom, or are internally derived, for example, internal taxation, will require novel approaches and new partnerships," Glaser says.

Whats troubling, too, U.S. authorities note, is that terrorist attacks can be done inexpensively. For example, the terrorist attacks on Londons mass transit system that killed 52 people in July 7, 2005 cost just $15,000 or so.

Intelligence authorities also note that its not just U.S. banks that terrorists like al Qaeda members have tried to use to facilitate funding, as the 9/11 attackers made use of U.S. banks to move funds.

Terrorists also often use seemingly legitimate businesses as fronts, including fast-food chains, shell companies, construction companies, retail shops such as bookstores, clothing stores or bakeries, agricultural businesses, even brokerages.

"Even as we make progress against core al Qaeda, we are finding that, with the rise of al Qaeda affiliates, the terrorist financing threat has metastasized and, in some ways, become more intractable, says Treasurys Glaser.

That is why a coordinated effort between U.S. agencies and bureaus is essential, officials note. For example, what helped uncover the Iran-al-Qaeda money link, the Treasury Department says, is its coordination of its terrorist money probes with the DoD and the Drug Enforcement Administration to develop the United States' own so-called threat finance cells.

What that means is U.S. officials have established a Baghdad-based interagency intelligence unit, known as the Iraq threat finance cell, and a threat finance cell in Afghanistan. These U.S. threat finance cells are led by officials from the Defense, the DEA and Treasury.

That coordinated effort led to the discovery of six members of an Iran-based al-Qaeda financial facilitation networks, says Glaser, showing that Iran has emerged as a vital facilitation conduit for al-Qaeda. Its provision of safe havens to al Qaeda is offering much needed breathing space for the group.

We are targeting two of al-Qaedas top strategists and commanders in Pakistan, as well as a senior facilitator, striking at the heart of al-Qaedas remaining leadership and its operations in Pakistan, says David S. Cohen, Treasurys under secretary for terrorism and financial Intelligence.

In turn, terrorists affiliated with al-Qaeda, or, say, Hezbollah must scrounge for funding for weapons, training, even hotel stays, U.S. officials say.

The Treasury Department's work is also netting big U.S. banks that have allegedly helped state sponsors of terrorism.

Just last week, Treasury fined JPMorgan Chase $88.3 million for violations of U.S. laws prohibiting such bank transactions for the likes of Cuba, Iran and Sudan. Treasury says the violations were egregious and took place between 2005 and March 2008, including 1,711 money transfers totaling $178.5 million for Cuba, as well as processing a 32,000 ounce transfer of gold bullion worth approximately $20,560,000 for the benefit of the government of Iran, Treasurys settlement document says.

In a statement, JPMorgan Chase says such errors are a tiny 1% of the banks total, annual transactions, but that it is pleased to have resolved the problem and that it is tightening its compliance program.

Treasury continues to uncover terrorist financing networks that wrap around the globe. For example, it says it has uncovered in Africa and South America, including Venezuela, financing networks supporting Hezbollah, the Shia Muslim group in Lebanon that is backed by Iran and Syria.

In South America, Treasury has designated fourteen Hezbollah individuals and entities, Treasurys Glaser adds. And over the past two years we have targeted Hezbollah commercial networks with tentacles in Cote DIvoire, Sierra Leone, the Gambia, the Democratic Republic of the Congo and Angola, he says.

Treasury says it has also brought sustained pressure on financial backers such as the state-owned Iranian Bank Saderat, which transferred more than $50 million to Hezbollah from 2001 to 2006, and is the primary architect of Iranian terrorism, the Iranian Revolutionary Guards Corps-Quds Force, a Treasury official says.

Since 9/11, the Treasury Department has frozen hundreds of millions of dollars in terrorist assets here and overseas. Those actions are done by Treasurys Office of Foreign Assets Control, which has shut down critical financial nodes of al Qaeda, Hamas and other foreign terrorist organizations, says Glaser.

As of 2010, Treasury says it has identified more than $424 million in assets related to four designated state sponsors of terrorism in the United States, as well as U.S. assets owned by al-Qaeda and Hamas.

Of that amount, Treasury froze $309 million in assets. It says it has also frozen $13.5 million in funds owned by al-Qaeda here in the U.S., and $2.6 million owned by Hamas.

Officials say the remaining balance of $115 million in assets represents non-blocked assets of individuals and entities located in Iran and Syria.

Treasury says it has also frozen six properties owned by Sudan in New Jersey, New York, Virginia, and Washington, D.C. And it has frozen 11 properties, including buildings, owned by Iran in California, Illinois, Maryland, New York, Texas, and Washington, D.C.